Overview
Equity valuation methods are essential tools for investors to determine the intrinsic value of stocks. By using techniques such as Discounted Cash Flow (DCF), Comparable Company Analysis, and the Dividend Discount Model (DDM), investors can make informed decisions about buying or selling shares. Eac...
Key Terms
Example: An investor calculates the intrinsic value of a stock to determine if it is worth buying.
Example: Positive cash flow indicates that a company is generating more money than it is spending.
Example: A higher discount rate reduces the present value of future cash flows.
Example: The Price-to-Earnings (P/E) ratio is a common valuation multiple.
Example: A company with a market cap of $1 billion is considered a large-cap stock.
Example: Investors often look for stocks with a consistent dividend payout.